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UPDATE 1-Malaysia PM clarifies comment on bribery allegations

* Did not intend to suggest alleged bribery was offset deal- statement

* Up to investigators to determine matter -statement (Adds comments, background)

KUALA LUMPUR, Feb 7 (Reuters) - Malaysia's Prime Minister Mahathir Mohamad on Friday sought to clarify comments he made on bribery allegations linked to AirAsia Group.

A statement from Mahathir's office said he had not intended to describe the alleged bribery as offset payments and that it would be up to investigators to determine the matter.

"In answering to questions by the press, he pointed out that it is normal for the government to request offset to benefit from big purchases," the statement said.

Offset is a common industrial practice in which in return for buying equipment from a foreign supplier, the buyer requests the deal provide support for the domestic economy by, for example, sourcing or manufacturing components locally.

"He did not say that AirAsia was benefiting from this normal practice. He said only that if the money goes to individuals that it becomes a bribe. If it is not for personal benefit then it is not a bribe in his view," the statement said.

The allegations were revealed last week as part of a record $4 billion settlement Airbus agreed with France, Britain and the United States. Prosecutors said the company had bribed public officials and hidden payments as part of a pattern of worldwide corruption.

AirAsia, the region's biggest budget airline, has repeatedly denied wrongdoing. AirAsia co-founders Tony Fernandes and Kamarudin Meranun have, however, relinquished their executive roles for at least two months while the allegations are investigated by the company and Malaysian authorities.

AirAsia runs an all-Airbus fleet of 274 planes and is the world's biggest customer of the A321neo single-aisle aircraft.

AirAsia shares closed 6.5% higher on Friday while those of AirAsia X were up 3.9%. (Reporting by Liz Lee. Editing by Jane Merriman)